PrintGood news for folks looking to save money at the grocery store. Turns out you can have champagne taste on a beer budget. Generic house brands, the lower-cost alternatives to national products, have gone gourmet.
In the supermarket world, no-name used to mean no-frills. (Remember canned goods with white or yellow labels, black lettering and bar codes?) That image has changed, says Alex Williams, president of Stamford-based Daymon Worldwide, one of the world's largest private-brands brokers. In many cases, except for the price tags, it's hard to tell private lines from name brands.
"Consumers used to think of house brands as a step down from national lines, but that is changing," says Williams. "Private labels have improved their packaging and improved their products. Some premium house brands are even better than the national brands. With private labels, consumers can save 10 to 15 percent on their grocery bills and get real quality."
They can also get a taste of the good life.
At Trader Joe's, the California-based chain that has built its empire on private labels, shoppers find organic tomatillo and roasted yellow chili salsa, fresh apple mango mangosteen juice, pesto Parmesan turkey burgers, sweet potato frites and thousands of other trendy foods.
Whole Foods' 365 line includes tomato spinach fusilli pasta, garlic and herb goat cheese and organic decaffeinated green tea with lemon myrtle. The company's newer Whole Foods Market label features about 2,000 "artisan small batch foods."
Stop & Shop's natural and organic foods, marketed under the Nature's Promise name, features cage-free natural brown eggs, cappuccino pecan cookies and organic nut butters. The chain's second house brand, "Simply Enjoy," includes Starbucks-clone packages of Colombian and flavored coffees.
Target's Archer Farm's line features such haute hors d'oeuvres as flatbread crackers, rosemary-herbed potato chips and olive tapenade.
Big Y's Full Circle line of natural and organic products includes sesame cheddar rice crisps, soy milk and whole wheat penne pasta.
SOME STORE BRANDS ARE EXACTLY THE SAME
In some cases, store brand products are not just similar but exactly the same as national brands, says Chris Prosperi, chef and co-owner of Metro Bis restaurant in Simsbury.
"When I visited a plant in Brooklyn to see about having some of our restaurant sauces jarred for sale, I was given a tour of the factory. While I was going through, I noticed that every 15 minutes or so, the bottling line would stop and then start again," says Prosperi.
He asked the plant manager what was happening and learned that the belt stopped to allow labels to be changed.
"They were bottling a national brand of tomato vodka sauce," says Prosperi. "Every so often, they would simply change the label to a store brand. Same sauce, same bottle, but very different price when it landed on store shelves."
BRAND LOYALTY VS. LOWER PRICES
Increased choices and a tightening economy have encouraged shoppers to trade brand loyalty for lower prices, industry experts say. According to Nielsen research, store brand sales have grown close to 6 percent in the past six months, while national brands have seen about a 3 percent loss in sales.
At Trader Joe's, about 80 percent of the items sold are house brands, marketed under such names as "Trader Joe," "Trader Giuseppe" and "Trader Jose."
The practice saves money on market-research budgets and glitzy ad campaigns, says Alison Mochizuki, director of national publicity. Those savings, she says, are passed on to customers.
"We do private label because it helps us keep our costs low and allows us to try new things," says Mochizuki.
Whole Foods Market has seen house brand sales jump more than 30 percent in the past five years.
"Private labels are our fastest-growing segment," says Kim St. Paul, vice president of purchasing, marketing and distribution at Whole Foods. "In this economy, price and value are key. Customers are motivated to find lower-cost alternatives to national brands. Once they try something and like it, they're likely to keep buying it and to try other things in the line as well."
A recent survey conducted by GfK Custom Research North America bears that out. Nine out of 10 shoppers polled said that store-brand products are just as good or better than name-brand products.
The trend toward private brands has moved beyond grocery-store shelves. E-tail giant Amazon recently announced it would be marketing home furnishings, tools, kitchenware and linens under its Pinzon, Denali and Strathwood labels.
It's a smart move. Nielsen's research shows that once the economy improves, some consumers may return to national labels, but many may opt to continue shopping generic.
"I expect store brands to enjoy continued success post-recession, not just because of rising consumer interest, but because of increased retailer focus as well," says Todd Tale, Nielsen's senior vice president of consumer and shopping insights. "Many retailers have really stepped up their game with regard to private label quality, packaging and marketing initiatives."
